Exec. Excess 2007: The Staggering Cost of Corporate Leadership

14th Annual Labor Day ”˜Executive Excess' Report:

Americans Pay a Staggering Cost for Corporate Leadership

(Washington, D.C.) With leading Presidential candidates turning up
the heat on overpaid CEOs, a new report from the Institute for Policy
Studies and United for a Fair Economy documents for the first time the
extreme pay gaps that have opened up not just between U.S. business
leaders and American workers, but between U.S. business leaders and
leaders elsewhere in American - and European - society.

CEO-WORKER PAY GAP: CEOs of large U.S. companies
last year averaged $10.8 million in total compensation, over 364 times
the pay of the average U.S. worker, a calculation based on data from an
Associated Press survey of 386 Fortune 500 companies.

The top 20 private equity and hedge fund managers, pocketed an
average $657.5 million, Forbes magazine estimates. That's 22,255 times
the pay of an average U.S. worker.

Workers on the bottom rung of the economy have just received their
first federal minimum wage increase in a decade. But the
inflation-adjusted value of the new minimum, despite the hike, stands 7
percent below the minimum wage level a decade ago. CEO pay, in that
decade, has increased over inflation by roughly 45 percent.

PENSION AND PERK GAPS: CEOs at major U.S.
corporations enjoyed, on average, $1.3 million in pension gains last
year. By contrast, only 58.5 percent of American households led by a
45-to-54-year-old even had a retirement account in 2004. Between 2001
and 2004, the retirement accounts of these households gained an average
of only $3,775 in value per year.

CEOs of S&P 500 companies retire with an average $10.1 million
in their special Supplemental Executive Retirement Plans, accounts not
open to average workers. By contrast, only 36.3 percent of American
households headed by an individual 65 or older held any type of
retirement account in 2004. The accounts that did exist averaged only
$173,552 per household.

The top 386 CEOs took in perks worth an average of $438,342 in 2006.
A minimum wage worker would need to work 36 years to earn as much as
CEOs obtained just in perks last year.

THE LEADERSHIP PAY GAP: Compensation for American
business leaders now wildly dwarfs the pay that goes to leaders in
other sectors of American society. The 20 highest-paid individuals at
publicly traded corporations last year took home, on average, $36.4
million. That's 38 times more than the 20 highest-paid leaders in the
nonprofit sector and 204 times more than the 20 highest-paid generals
in the U.S. military.

The 20 highest-paid figures in the private equity and hedge fund
industry collected 3,315 times more in average annual compensation in
2006 than the top 20 officials of the federal government's executive
branch, a group that includes the President of the United States.

"Today's soaring pay gap between business executives and elected
leaders in government essentially makes corruption inevitable," notes
Sam Pizzigati, an Institute for Policy Studies associate fellow. "With
such huge windfalls at stake, business leaders have a powerful
incentive to manipulate the political decisions that affect corporate
earnings."

THE US-EUROPEAN EXECUTIVE PAY GAP: In 2006, the 20
highest-paid European corporate managers made an average of $12.5
million, only one third as much as the 20 highest-earning U.S.
executives took home last year. These 20 top European execs led
companies that generated $19 billion more in sales revenue than the
corporations led by their higher-paid American counterparts.

PROPOSALS FOR CHANGE:Executive Excess 2007
highlights six practical initiatives that can rein in runaway executive
pay. Five involve eliminating perverse tax incentives for excessive
pay, while one would use government contracting dollars to encourage
more reasonable pay.

According to report co-author Chuck Collins, "Meaningful change
could be on the horizon, as many political leaders are finally catching
up to the public outcry to rein in excessive compensation."

Authored by Sarah Anderson, John Cavanagh, Chuck Collins, Sam Pizzigati, and Mike Lapham, Executive Excess 2007 is the 14th annual CEO pay study by the Institute for Policy Studies and United for a Fair Economy.

The Institute for Policy Studies is an independent center for
progressive research and education in Washington, D.C. United for a
Fair Economy is a national organization based in Boston that spotlights
growing economic inequality.